DBS sees cable closing digital gap

While obscured by the news of a possible breakup of the EchoStar/News Corp. alliance, a distinct undertone of panic permeated the Satellite Broadcasting and Communications Association's SkyForum show last month.

Sounding eerily like the cable industry discussing direct broadcast satellite (DBS) services a year ago, panelists acknowledged that digital cable is on its way, but they breezily brushed away the possibility of a threat.

"I don't think cable has a bright future," said Gary Shapiro, president of the consumer electronics manufacturing association. "They haven't been able to develop a real cable modem or a real digital offering, and it makes more sense to send something over the air than over wires. We simply have a better product."

In an ironic piece of imagery, panelists were eager to portray DBS as David against cable's Goliath--much as the cable industry has painted itself in relation to the larger, wealthier telephone industry.

But cable is narrowing the gap as it gets closer to deploying digital services, and DBS needs to meet that challenge, industry leaders said during the afternoon's panel discussion.

"Digital cable boxes are out there," said Gary Howard, president and chief executive officer of TCI Satellite Entertainment. "The challenge is keeping ahead of cable."

By the end of the century, those DBS carriers that have found a way to transparently deliver local signals to multiple boxes in the home will be the winners, said EchoStar CEO Charlie Ergen.

Ergen also discussed the dish war that he sparked last summer by slashing the price of his hardware package from $600 to $199, prompting DirecTV to follow suit and igniting consumer demand for DBS.

"I thought that was where the marketplace needed to go," Ergen said. "I don't think we would have done that if we were the incumbent, but we were the new guys."

And after jibing AlphaStar head Dave Charles about the fledgling DBS carrier's low stock price, Ergen was forced to defend his characteristically casual attire. "I don't have a tie because I wanted to pass the savings on to our customers," he said.

When reminded that he was wearing a tie when he announced EchoStar's alliance with News Corp., Ergen responded that he borrowed that tie from News Corp. head Rupert Murdoch. "I got a bill for it Thursday," he said. "I guess I should have known then that something was amiss."